MEMORANDUM OVERRULING OBJECTIONS TO CONFIRMATION ?· under chapter 11 of the Bankruptcy Code on October…

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<ul><li><p>UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE </p><p>In re: </p><p>TRIBUNE COMPANY, et. a1, 1 </p><p>Debtors </p><p>CHAPTER 11 (Jointly Administered) </p><p>Case No. 08-13141 (KJC) (Re: D.I. 11399, 11836, 11458) </p><p>MEMORANDUM OVERRULING OBJECTIONS TO CONFIRMATION OF THE FOURTH AMENDED PLAN OF REORGANIZATION </p><p>FOR TRIBUNE COMPANY AND ITS SUBSIDIARIES AND DENYING CLARIFICATION MOTION' </p><p>BY: KEVIN J. CAREY, UNITED STATES BANKRUPTCY JUDGE </p><p>Before the Court for consideration is the Fourth Amended Joint Plan of Reorganization </p><p>for Tribune Company and Its Subsidiaries Proposed by the Debtors, the Official Committee of </p><p>Unsecured Creditors, Oaktree Capital Management, L.P., Angelo Gordon &amp; Co., L.P., and </p><p>JPMorgan Chase Bank, as revised (the "Fourth Amended Plan"). 3 The DCL Plan Proponents </p><p>seek confirmation of the Fourth Amended Plan, but objections to confirmation filed by the </p><p>'The chapter 11 case filed by Tribune Media Services, Inc. (Bky. Case No. 08-13236) is jointly administered with the Tribune Company bankruptcy case and 109 additional affiliated debtors pursuant to the Order dated December 10, 2008 (docket no. 43). An additional debtor, Tribune CNLBC, LLC (formerly known as Chicago National League Baseball Club, LLC) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on October 12, 2009 (Bky. Case No. 09-13496), and is also jointly administered with the Tribune Company bankruptcy case pursuant to this Court's Order dated October 14, 2009 (docket no. 2333). The debtors in the jointly administered cases are referred to herein as the "Debtors." </p><p>'This Memorandum constitutes the findings of fact and conclusions of law, required by Fed.R.Bankr.P. 7052. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334 and 157(a). This is a core proceeding pursuant to 28 U.S.C. 157(b)(1) and (b)(2)(A), (B), (L), and (0). </p><p>3 The Debtors, the Official Committee of Unsecured Creditors (the "Creditors' Committee"), Oaktree Capital Management, L.P. ("Oaktree"), Angelo Gordon &amp; Co., L.P. ("Angelo Gordon") and JPMorgan Chase Bank ("JPM") may be referred to jointly herein as the "DCL Plan Proponents." At the hearing on June 7, 2012 the Fourth Amended Plan (docket no. 11399) was admitted into evidence as DCL Exhibit 3000. Since then, the Fourth Amended Plan has been revised. (docket no. 11836). </p></li><li><p>following parties remained unresolved: (i) Aurelius Capital Management, L.P. ("Aurelius") </p><p>(docket nos. 11664 and 11753), (ii) Law Debenture Trust Company of New York ("Law </p><p>Debenture") (docket no. 11668), (iii) Deutsche Bank Trust Company of Americas ("Deutsche </p><p>Bank") (docket no. 11667), (iv) Wilmington Trust Company ("WTC") (docket no. 11666), (v) </p><p>Citadel Equity Fund Ltd. and Camden Asset Management LP (together,"Citadel Camden") </p><p>(docket no. 11659), (vi) EGI-TRB LLC ("EGI") (docket no. 11658), (vii) certain former </p><p>directors and officers of the Debtors (the "D&amp;Os") (docket no. 11657), and (viii) F. Ashley </p><p>Allen, Catherine M. Hertz, Michael D. Slason, and Louis J. Stancampiano ("Certain Former </p><p>Employees") (docket no. 11661). 4 </p><p>The DCL Plan Proponents responded to the objections to confirmation of the Fourth </p><p>Amended Plan by filing the Memorandum of Law in Support of Confirmation and Omnibus </p><p>Reply to Objections to Confirmation (docket no. 11746). Other parties weighed in by filing </p><p>replies to some of the objections, including (i) the Statement of Robert R. McCormick Tribune </p><p>Foundation (the "McCormick Foundation") and Cantigny Foundation in Response to Objection </p><p>of Aurelius Capital Management, LP (docket no. 11725), (ii) the D&amp;Os' Reply to the Objection </p><p>of Aurelius Capital Management, LP (docket no. 11739), (iii) the D&amp;Os' Joinder to the </p><p>Statement of the Robert R. McCormick Tribune and Cantigny Foundations (docket no. 11740), </p><p>and (iv) the Bridge Agent's Reply, and Joinder to the DCL Plan Proponents' Reply, to the </p><p>4 The Plan Proponents resolved the objections to confirmation filed by the State of Michigan, Department of Treasury (docket no. 11562), the United States (on behalf of the Internal Revenue Service) (docket no. 11653), the Missouri Department of Revenue (docket no. 11656), and certain former employees and/or directors (and beneficiaries of such former employees and /or directors) of the Times Mirror Company (the "TM Retirees") (docket no. 11720). A letter objection sent by Malcolm Berko (docket no. 11600) was listed as an objection to confirmation. Neither Mr. Berko nor anyone on his behalf appeared at the Confirmation Hearing to press this objection, which raises no issues of merit; accordingly, it is also overruled for his failure to appear and prosecute the objection. </p><p>2 </p></li><li><p>Objection of Aurelius Capital Management, LP (docket no. 11748). </p><p>A hearing to consider confirmation of the Fourth Amended Plan was held on June 7 and </p><p>8, 2012, and continued via conference call on June 11, 2012 (together, the "Fourth Amended </p><p>Plan Confirmation Hearing"). </p><p>On June 18, 2012, the DCL Plan Proponents filed the revised Fourth Amended Plan </p><p>(docket no. 11836) to incorporate modifications that resolved a number of objections to </p><p>confirmation. On the same date, the DCL Plan Proponents also filed revised exhibits and other </p><p>documents related to the Fourth Amended Plan, including (i) Plan Exhibit 13.1 - the Litigation </p><p>Trust Agreement, the Litigation Trust Loan Agreement, the proposed Agreement Respecting </p><p>Transfer of Documents, Information, and Privileges from Debtors and Reorganized Debtors (the </p><p>"Debtors' LT Agreement"), the proposed Agreement Respecting Transfer of Documents, </p><p>Information, and Privileges from the Official Committee of Unsecured Creditors (the </p><p>"Committee's LT Agreement"). 5 </p><p>On June 20, 2012, Aurelius filed a letter objection with the Court (docket no. 11856) </p><p>arguing that changes made to the proposed Committee's LT Agreement regarding the Litigation </p><p>Trustee's discovery rights with respect to the Creditors' Committee did not address its concerns. </p><p>The Creditors' Committee filed a letter in response (docket no. 11867) and a telephonic hearing </p><p>was held on June 21, 2012 to discuss the issue. </p><p>On July 11, 2012, a further hearing was held to address the Certain Former Employees' </p><p>objection and Aurelius' objection to the Committee's LT Agreement. After colloquy with </p><p>'Those documents were attached as exhibits to the revised Fourth Amended Plan and are also found at docket no. 11836. </p><p>3 </p></li><li><p>counsel at the July 11, 2012 hearing, the objection by the Certain Former Employees was </p><p>withdrawn. At the July 11, 2012 hearing, the Court also suggested language to address Aurelius' </p><p>objection to provisions in the proposed Committee's LT Agreement concerning certain </p><p>discovery rights of the Litigation Trustee vis-a-vis the Creditors' Committee (including its </p><p>retained professionals). The parties discussed the Court's proposed language and agreed to make </p><p>further revisions to the affected paragraphs. However, Aurelius requested one additional change </p><p>to which the Creditors' Committee did not agree. The revised language as otherwise agreed to by </p><p>the parties at the July 11, 2012 hearing (without Aurelius' final change), was submitted under </p><p>Certification on July 12, 2012 (docket no. 12001). The proposed Committee's LT Agreement, as </p><p>revised, fairly addresses Aurelius' concerns. Accordingly, Aurelius' last remaining request is </p><p>denied. </p><p>For the reasons set forth herein, the remaining objections by Aurelius, Law Debenture, </p><p>Deutsche Bank, WTC, EGI, Citadel Camden, the McCormick Foundation, and the D&amp;Os will be </p><p>overruled. Subject to submission of final revisions to the Fourth Amended Plan consistent with </p><p>various resolutions that have been made, by agreement and consistent with this Memorandum, </p><p>the Fourth Amended Plan will be confirmed. </p><p>BACKGROUND </p><p>The arduous journey for confirmation of a plan is chronicled in three previous decisions: </p><p>the Confirmation Opinion dated October 31, 2011, In re Tribune Co., 464 B.R. 126 </p><p>(Bankr.D.Del. 2011) (the "Confirmation Opinion" or "Tribune I"), the Memorandum on </p><p>Reconsideration dated December 29, 2011, In re Tribune Co., 464 B.R. 208 (Bankr.D.Del. 2011) </p><p>(the "Reconsideration Decision" or "Tribune II"), and the Memorandum Regarding Allocation </p><p>4 </p></li><li><p>Disputes dated April 9, 2012, In re Tribune Co., 2012 WL 1190142 (Bankr.D.Del. April 9, 2012) </p><p>(the "Allocation Decision" or "Tribune III"). 6 A detailed description of the Debtors (including </p><p>an overview of the Debtors' business, their pre-petition debt structure, the 2007 leveraged buy-</p><p>out (the "LBO")), and the chapter 11 proceedings (including the appointment of and </p><p>investigation by the Examiner, plan mediation efforts, and the filing of four competing plans of </p><p>reorganization) can be found in the Confirmation Opinion. Tribune I, 464 B.R. at 136-46. </p><p>The Confirmation Opinion addressed two proposed competing plans of reorganization for </p><p>the Debtors: (i) the Second Amended Joint Plan of Reorganization for Tribune Company and Its </p><p>Subsidiaries (the "Debtor/Committee/Lender Plan" or the "DCL Plan") proposed by the Debtors, </p><p>the Creditors' Committee, Oaktree, Angelo Gordon, and JPM, and (ii) the Joint Plan of </p><p>Reorganization for Tribune Company and Its Subsidiaries (the "Noteholder Plan") proposed by </p><p>Aurelius, Deutsche Bank, Law Debenture and WTC. After a confirmation hearing spanning </p><p>more than two weeks, followed by post-hearing briefing and closing arguments, I determined </p><p>that both plans failed to meet the requirements of Bankruptcy Code 1129, for the reasons </p><p>detailed in the Confirmation Opinion, and I denied confirmation of both plans.' However, the </p><p>Confirmation Opinion contained detailed analyses and determined a number of disputed issues </p><p>related to confirmation, including, among other things, the Debtors' valuation, and the </p><p>6 The conclusions in the Allocation Decision were made subject to, conditioned upon and for the purpose of obtaining confirmation of a chapter 11 plan substantially in the form of the Third Amended Plan. Tribune III, 2012 WL 1190142 at *1. The Fourth Amended Plan is substantially in the form of the Third Amended Plan. </p><p>'The DCL Plan Proponents' Supplemental Disclosure Document Related to the Fourth Amended Plan (docket no. 11400, DCL Exhibit 3001) (the "Supplemental Disclosure Document") describes the manner in which the Fourth Amended Plan resolves the defects in the DCL Plan that were identified in the Confirmation Opinion. See Supplemental Disclosure Document at 9 - 12. </p><p>5 </p></li><li><p>reasonableness of the Settlements proposed in the DCL Plan.' The Confirmation Opinion also </p><p>analyzed the competing plans under 1129(c) 9 and decided that, assuming the proponents of the </p><p>competing plans could correct the flaws that prevented confirmation under 1129, and then </p><p>refiled the corrected plans with substantially similar terms and similar voting results, then the </p><p>DCL Plan would have the edge for confirmation. Tribune I, 464 B.R. at 207-08. </p><p>Various parties filed motions for reconsideration of the Confirmation Opinion.' On </p><p>December 29, 2011, this Court issued the Reconsideration Decision granting the relief requested </p><p>in the Law Debenture Reconsideration Motion and the Aurelius Reconsideration Motion and </p><p>striking that part of the Confirmation Opinion defined as the "Subordination Determination," </p><p>which considered whether the subordination provisions of the PHONES Notes applied to any </p><p>'In the Confirmation Opinion, the Debtors' Total Distributable Value was determined to be the mid-point of a July 2011 expert report, or $7.019 billion. At the Fourth Amended Plan Confirmation Hearing, the DCL Proponents provided an updated valuation of the Debtors through the Expert Report of John G. Chachas dated April 27, 2012. DCL Ex. 3002. The Expert Report was admitted into evidence without objection. Tr. 6/7/12 at 20. The Expert Report determined that the range of the Debtors' Total Distributable Value was between $6.917 billion to $7.826 billion, with an approximate midpoint value of $7.372 billion. DCL Ex. 3002 at 3-4. The asserted increase in value was attributed, in part, to growth in Distributable Cash between December 27, 2010 and December 25, 2011. Id. No opposing valuation evidence was offered. However, the Court was not asked to determine a revised value for the Debtors; rather, the information was provided in the Supplemental Disclosure Document for informational purposes and as part of the record in support of the DCL Plan Proponents' request for confirmation of the Fourth Amended Plan. Tr. 6/8/12 at 86-88. </p><p>9Bankruptcy Code 1129(c) provides, in pertinent part: "If the requirements of subsections (a) and (b) of this section are met with respect to more than one plan, the court shall consider the preferences of creditors and equity security holders in determining which plan to confirm." </p><p>m The three motions for reconsideration were: (1) Joint Motion of Law Debenture Trust Company of New York and Deutsche Bank Trust Company Americas Requesting Reconsideration of the Court's Confirmation Opinion with Respect to the Subordination of the PHONES (the "Law Debenture Reconsideration Motion") (docket no. 10222), (2) Motion of Aurelius Capital Management, LP for Reconsideration of the Court's October 31, 2011 Decision as it Pertains to the Application of the PHONES Notes Subordination (the "Aurelius Reconsideration Motion") (docket no. 10226), and (3) Motion of the Noteholder Plan Proponents for Reconsideration and Clarification of the Court's October 31, 2011 Decision (the "NPP Reconsideration Motion") (docket no. 10227). </p><p>6 </p></li><li><p>funds recovered from the Litigation Trust's pursuit of causes of action arising under Chapter 5 of </p><p>the Bankruptcy Code." Tribune II, 464 B.R. at 213-221. Upon reconsideration and further </p><p>review of applicable state law and the entirety of the language in the PHONES Indenture, I </p><p>concluded in the Reconsideration Decision that the subordination provisions in the PHONES </p><p>Indenture applied to distribution of monies recovered by the Litigation Trust on Chapter 5 causes </p><p>of action. Id. </p><p>On November 18, 2011, the DCL Plan Proponents filed the Third Amended Joint Plan of </p><p>Reorganization for Tribune Company and Its Subsidiaries (docket no. 10273)(the "Third </p><p>Amended Plan"). The Third Amended Plan included an "Allocation Dispute Protocol" which </p><p>proposed to establish reserves for distributions to holders of allowed claims in certain classes </p><p>that would be impacted by unresolved disputes regarding inter-creditor priorities, particularly </p><p>with respect to the PHONES Notes and the EGI-TRB LLC Notes (the "EGI Notes"). 12 Third </p><p>Amended Plan, 5.18 and Exhibit 5.18. Upon the request of certain parties, I agreed to resolve </p><p>the "Allocation Disputes," as defined in the Order dated January 24, 2012 (docket no. 10692) </p><p>before parties were required to vote on or object to confirmation of the Third Amended Plan On </p><p>April 9, 2012, I issued the Allocation Decision which, among other things, determined the </p><p>applicability of subo...</p></li></ul>


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